| UK company law’s environmental shortcomings leave investors at risk |
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13 July 2010 | Press release UK company law is failing to protect not only the environment and global communities but by extension pension-holders and other investors in the UK. Legal experts at ClientEarth, a non-profit environmental law organisation, have today released 'Environmental and Social Transparency under the Companies Act 2006: Digging Deeper' which explores weaknesses in UK law that allow companies to cover up their true environmental and social impacts and risks in their annual reports. In Digging Deeper ClientEarth has proposed a clear and practical way of achieving robust reform of the Companies Act 2006, and is engaging with the government as a review of the law is taken forward. James Thornton, CEO, ClientEarth, says: “The Companies Act requires UK-registered companies to report not only on their financial performance and prospects, but also on their environmental and social record and future risks. Yet this law is neither robust, nor is it meaningfully enforced. “Some major UK firms ride roughshod over their reporting obligations. This means that poor and even reckless environmental behaviour goes unchecked. The impacts on the planet are disastrous – but environmental risk-taking also hits investors in the pocket. “We can see this with the Deepwater Horizon disaster, where BP’s share price plummeted by more than 50 per cent because of a so-called environmental concern. We need effective reporting laws so that companies disclose the details of their all of their practices accurately.” A call for robust reform The law that governs company reporting is soon to be reformed by the UK government – the coalition announced that it intends to reinstate the Operating and Financial Review (OFR), a model for how companies should be presenting their performance, risks and opportunities. ClientEarth believes that certain key factors will decide how effective the new law is – it remains to be seen exactly what the government intends to do, but simply reinstating the old OFR will not achieve the government’s goals, or effective corporate transparency. ClientEarth also argues that the UK’s regulator for company reporting – the Financial Reporting Review Panel (FRRP) – needs to have greater capacity and commitment to enforce the law. This means improved capacity and more court actions. The FRRP will play a key role under any new framework – its ability and willingness to implement the law will be fundamental to the effect of any reform. An event exploring these issues will be held in parliament today (13 July 2010, 16:30) ENDS Notes to editors For more information on the details of the law, or to arrange an interview, please contact Mike Haines ( This e-mail address is being protected from spambots. You need JavaScript enabled to view it , +44 (0)207 749 5978, +44 (0)7538 418 460) or George Leigh ( This e-mail address is being protected from spambots. You need JavaScript enabled to view it ) ClientEarth is an organisation of activist lawyers committed to securing a healthy planet. We work in Europe and beyond, bringing together law, science and policy to create pragmatic solutions to key environmental challenges www.clientearth.org |
